When thinking about the ‘Wild Wild West’, the first thing that comes into one’s mind is a Sunday afternoon rodeo thriller on the box, or for the younger generation, a trip on horseback through the desert, lasso in hand on the popular video game Red Dead Redemption.
Few would link this environment to the pensions industry, but at times it feels as if this is exactly what we find ourselves facing: a landscape with often very little order, questionable governance and multiple High Court rulings over pension transfers.
Last month, we had a landmark ruling by the High Court overruling the Ombudsman’s decision in the case Hughes v Royal London, centering on a pension transfer request made in 2014 to a new scheme.
The dispute arose after Royal London refused the request on the grounds of concerns about the status of the scheme and Hughes’ right to transfer her pension into it. Following the decision, Hughes complained to the Pensions Ombudsman, who subsequently ruled in favour with Royal London; his determination has now been successfully appealed to the High Court. Legal experts say that the judgment, in favour of Hughes, could give rise to further marketing of dubious schemes on the basis that the legal basis for declining transfers has been brought into question.
In addition to this, we have the DWP hastily preparing legislation to govern the operation of master trusts, following fears that opportunist firms are providing poor quality, or event fraudulent, solutions to capitalise on the rise in smaller employers automatically enrolling staff into pension schemes.
Finally, speaking to former Pensions Minister Steve Webb recently over a coffee, I asked the question of how close to the Budget he knew about Chancellor Osborne’s freedom and choice reforms and tax amendments. His response, one to two weeks before the Budget for the annuity changes and on the day for tax legislation. Yes, our own Pensions Minister at the time, not knowing about the tax changes to pensions until the day. Unbelievable. Now, the Treasury does indeed like to keep all things tax in its own hands but I find it staggering as to why Webb did not know about this beforehand. These are changes that significantly affect peoples’ retirement savings and the top man in pensions had as much time to digest the announcement as it takes for the average Sunday cowboy on telly to lasso his raccoon before it scampers away.
Now don’t get me wrong, I think the pensions governance, regulatory and communication space is improving all the time and that can only be a good thing, but as always there is room for improvement. Master trusts are currently a big topic in the news at the moment and the fact that no financial underpin is needed to these, meaning that if one fell apart at any moment the members would not be protected, says it all really. Let’s keep the pensions industry in shape and keep this landscape in order.